Codinal theory - consumer choice concernin utility, Macroeconomics

Ordinal Theory:

A Short Note In ordinal approach, utility is measured ordinally i.e., qualitatively (not numerically or quantitatively). Alternatively, consumer can rank her preferences according to the order she wants to compare but not in terms of the different amount. It's a qualitative measure and therefore more realistic measurement of utility or satisfaction. There are two different approaches of ordinal theory, viz.,

1) Indifference curve approach 

2) Revealed preference approach 

Indifference Curve Approach:

Indifference curve is constructed by taking utility level constant, so different indifference curves imply  different level of utility for same consumer. The equilibrium is achieved when indifference curve become tangent to the budget line. 

Revealed Preference Approach:  In revealed preference approach, consumer equilibrium can be found by ranking different bundle of goods in the commodity space. Given the budget constraint, consumer chooses the best bundle for which her utility will maximise. This theory was originally constructed by the famous economist Paul. A. Samuelson.  

Posted Date: 10/26/2012 2:21:54 AM | Location : United States







Related Discussions:- Codinal theory - consumer choice concernin utility, Assignment Help, Ask Question on Codinal theory - consumer choice concernin utility, Get Answer, Expert's Help, Codinal theory - consumer choice concernin utility Discussions

Write discussion on Codinal theory - consumer choice concernin utility
Your posts are moderated
Related Questions
What is the price elasticity of supply? Price elasticity of supply: The price elasticity of supply is a measure of the receptiveness of the quantity of a good supplied to pr

What is gross domestic product Economic growth is most commonly calculated in terms of the annual percentage rate of change in real gross domestic product (GDP).

Explain how inflation unemployment trade off is not feasible under adaptive expectations?

Assume the residents of an economy spend all of their income on cauliflower, broccoli and carrots. In 2003 they buy100 heads of cauliflowers for Rs. 200; 50 bunch of broccoli f

Expenditures and the Effects of Fiscal Policy are stated as follows: Having finished the discussion on the tax policy and taxation, now let’s us focus on expenditures and the e

Q. Explain the labor market in the cross model? In cross model, both P and W are exogenous andconstant. Hence real wage is constant and it is not essentially equal to the equil

Determine the current productivity results for the non-farming business sector and the manufacturing sector. Discuss recent productivity and cost trends and make predictions for th

The aggregate production function Definition Imagine the national economy during a short period of time (say one week). We refer:  L: total amount of work used duri

Identify and explain the evidence for and against the competitive model. Provide specific examples.

I am writing a macroeconomics commentary about a supply shock-induced inflation, can I include a shortage diagram I learnt in microeconomics and just change demand and supply to AD